Study suggests value of sustainability is overlooked in most businesses

Companies are failing to create value from sustainability because there is a lack of integration across C-suite functions, according to research conducted by two sustainability experts, Dr Robert Eccles and Alison Taylor, working in partnership with GlobeScan and Salesforce.

The research, based on a survey of over 230 senior business leaders, reveals that over 90% agree that sustainability is important, but only half focus on it, and around a quarter invest money to mitigate sustainability risks or seize the opportunities.

In addition to this capital gap, the researchers identified other barriers, including:

• poor integration of sustainability with functions that have the biggest potential to generate value, for example operations. As a result, it becomes difficult to connect sustainability with financial worth; 

• a lack of integration of sustainability in core business functions, such as finance and technology, which limits understanding of the commercial benefits;and 

• poor quality data on sustainability performance, making it difficult to assess the value of sustainability and comply with new reporting standards and requirements.

Implementation gap

Digging into the implementation gap, the survey asked respondents to rank the value they perceive linked to 12 sustainability outcomes. This shows most value is associated with perception of the organisation, such as enhancing brand reputation, stakeholder relations, and employee attraction and retention. Operational outcomes – such as risk, business continuity and compliance, and bottom line impacts, such as growing sales, attracting investment, and increasing efficiencies and reducing costs – all ranked lower.

The report’s authors note that senior management spend most of its time focusing on these operational areas, so it is not surprising that their support of sustainability is nominal. They also warn against a focus on seeing perception as an end in itself, separated from core operations and business direction, as it can lead to limited progress and greenwashing.

However, on a positive note, when asked about the most helpful actions for unlocking value from sustainability, most respondents identified R&D and innovation – an area that does attract capital investment and has the potential to drive change.

Integration is lacking

In terms of integration, again there is a mismatch between perception and reality, with nearly 67% of respondents viewing sustainability as very important, but only 37% considering it to be very integrated into their businesses. Nearly 90% of leaders think the finance function is important to progress on sustainability, and 75% think tech is. Yet while the report notes that financial and technology leaders should play a pivotal role, there is a major gap in collaboration with sustainability leaders.

Data mismatch

The mismatch in data is even greater, with 95% of leaders considering access to high-quality data on sustainability performance to be important for unlocking the full value of sustainability, yet just under 30% say they currently have access to such data. The report points out that organisations with better access to high-quality data are most likely to value sustainability. It also notes that reporting requirements, like those from the International Sustainability Standards Board (ISSB) and in the Corporate Sustainability Reporting Directive (CSRD), are driving data needs. There is an opportunity to use this data to drive value from sustainability activities, but teams need sufficient resources and upskilling to feed it into business strategy and integrate it into management so that it drives capital allocation decisions.

The report states: “The solution is not running away from sustainability as value creation. Rather, companies need to back up their rhetoric with practical action, closing the key gaps of capital allocation, implementation, integration and data to understand and deliver the full value of sustainability.”

Alison Taylor, a clinical associate professor at NYU Stern School of Business and executive director at Ethical Systems. Robert G. Eccles, visiting professor at Saïd Business School, University of Oxford, is an expert in ESG, sustainability, and sustainable investing, with a focus on addressing climate change.

Report: Sustainable Value Creation.